ENERGY

As utilities go green, some are seeing red

Consumer groups rap efforts to gain rewards for conservation.

PUC President Michael Peevey, energy efficiency experts and utility executives say the challenges require a wholesale shift in focus at the state's utilities. As a result, they say, energy efficiency endeavors should offer profit-making opportunities that are equivalent to the money companies earn by building power plants and selling the output.

"We're definitely pushing the envelope very hard, and that requires extraordinary measures, and one of those is earnings ... for shareholders" from energy efficiency, said Mark Gaines, director of consumer programs at San Diego Gas & Electric Co. and SoCal Gas, subsidiaries of San Diego-based Sempra Energy. "The amount is certainly what the commission needs to decide on."

Under SDG&E's plan, it and the other investor-owned utilities would be rewarded with a collective $403 million if they meet the state's targets for 2006 through 2008, a figure that would rise to more than $1 billion if the group achieves 150% of the goals.

PG&E's plan calls for combined payments of $538 million for meeting the efficiency marks, and up to $686 million for exceeding the mark -- suggesting a possible profit of between 27% and 34% on the three-year $2-billion energy-efficiency budget.

The Utility Reform Network wants utility incentives to total $54 million for 100% success, rising to about $100 million if the companies exceed the targets.

The utilities didn't specify how much the incentives would add to customer bills. But the Utility Reform Network estimated that $500 million in new rewards would swell the average customer's monthly bill by $15 a year or $1.25 a month over three years. A $1-billion incentive boost would double the monthly cost.

Utility commission officials are expected to rule on the issue by the end of summer. The final plan probably also will include penalties for poor results.

"We should set the incentives a little rich, so that the utilities exceed your expectations, and then you can trim back, for the next phase," said Darbee of PG&E. "If you have them so low that the utilities don't get excited about it, then you'll have a program that

Consumer advocate Hawiger scoffs at that line of reasoning. "We're not even asking them to foot the bill. We're asking them to do the right things for a small fee rather than for a huge profit," he said.

"Joe Q. Public should be outraged that the utilities are going around bragging about how green they are ... and at the same time, they're asking for profits so that they will do what we're already paying them to do, but better."